The estimates of government expenditure on education provided in this section accord with national accounting concepts. An explanation of these concepts is contained in Government Finance Statistics: Concepts, Sources and Methods (5514.0); Information Paper: Developments in Government Finance Statistics (5516.0); Information Paper: Accruals-based Government Finance Statistics (5517.0); and Expenditure on Education, Australia (5510.0).

The accrual-based estimates in tables 10.1,10.2, and 10.3 are not comparable with the cash-based estimates published in past editions of Year Book Australia. An accrual system records transactions in the period in which income is earned or expenses incurred, regardless of whether a cash payment is made. A conceptual framework, derived from the international standard ASystem of National Accounts 1993, is used for these accrual-based estimates.

The total operating expenses on education for all Australian governments increased by 5.3% from $32,335m in 1998-99 to $34,036m in 1999-2000. In 1999-2000 total expenditure on non-financial assets for all Australian governments, a cash measure, was $1,976m, up from $1,718m in 1998-99. Cash-based private expenditure on education (final consumption expenditure plus gross fixed capital formation) increased by 6.3% from $9,006m in 1998-99 to $9,575m in 1999-2000; it represented 1.5% of Gross Domestic Product (GDP) in both years.

Because total operating expenses are an accrual measure, while both expenditure on non-financial assets and private expenditure on education are cash measures, the three should not be added together.

In 1999-2000, public expenditure on education was 5.4% of GDP, with private education spending at 1.5% of GDP. In 2000, some 9,595 schools provided primary and secondary education for 3.2 million school students, 69% of whom attended government schools. VET institutions were well patronised, with 1.7 million clients, and there were 695,500 higher education students. An estimated 612,100 persons were employed in the education industry, representing 6.9% of the civilian workforce.

Table 10.1 presents the total education expenses of governments in 1999-2000, by purpose. Primary and secondary education comprised 54% of total operating expenses on education, university education 28%, and technical and further education 10%. Total operating expenses include depreciation of fixed assets, but do not include cash payments for expenditure on non-financial assets, a component of the broader financial statements.

(a) The multi-jurisdictional sector currently includes only universities.

Source: ABS data available on request, Public Finance collection.

Table 10.2 shows the components of operating expenses on education by economic transaction type in 1999-2000. Employee expenses accounted for 54%, with the balance largely in non-employee expenses (22%) and current transfer expenses (19%).

10.2 GOVERNMENT OPERATING EXPENSES ON EDUCATION, By Economic Transaction- 1999-2000

Economic transaction type

Commonwealth

$m

State and local

$m

Multi-
jurisdictional(a)

$m

Total sectors

$m

Intra-
sector transfers

$m

Australia

$m

Employee expenses

155

13,355

4,963

18,472

-

18,472

Non-employee expenses

266

4,406

2,734

7,407

-

7,407

Depreciation of fixed assets

138

941

641

1,719

-

1,719

Current transfer expenses

9,370

4,407

321

14,098

7,767

6,331

Capital transfer expenses

370

116

-

486

380

106

Total

10,299

23,225

8,659

42,183

8,148

34,036

(a) The multi-jurisdictional sector currently includes only universities.

Source: ABS data available on request, Public Finance collection.

Table 10.3 summarises Commonwealth grants for education to the States and Territories in 1999-2000. The major beneficiary of Commonwealth grants (both current and capital) was primary and secondary education, receiving 59% of the total granted (both current and capital) for education. Another 27% of Commonwealth grants for education was directed to universities.

10.3 COMMONWEALTH GRANTS FOR EDUCATION - 1999-2000

$m

Current grants to States, Territories and Universities

Primary and secondary education

4,279

Technical and further education

927

Universities

2,052

Other education not definable by level

157

Total

7,415

Capital grants to States, Territories and Universities

Primary and secondary education

337

Technical and further education

-

Universities

30

Other education not definable by level

4

Total

369

Total grants to States, Territories and Universities

Primary and secondary education

4,615

Technical and further education

927

Universities

2,085

Other education not definable by level

159

Total

7,787

Source: ABS data available on request, Public Finance collection.

Funding of schools

On an accrual basis, the primary and secondary education expenses of Australian governments totalled $18,455m in 1999-2000. Expenses associated with preschool education and education not definable by level were $1,111m. State, Territory and local governments also contributed funds to other aspects of schooling such as student transport, costing $817m in 1999-2000. As table 10.1 showed, preschool, primary, secondary, and other special education expenses were largely met by State, Territory and local governments.

While primary and secondary education is free in government schools in all States and Territories, fees may be charged for the hire of text books and other school equipment (particularly in secondary schools). Voluntary levies may also be sought from parents.

In addition to funding schools directly, most State and Territory Governments provide financial assistance to parents (under specified conditions) for educational expenses of school children. Assistance includes scholarships, bursaries, and transport and boarding allowances, many of which are intended to assist low-income families. The Commonwealth Government also provides a number of assistance schemes to facilitate access to education.

Funding of Vocational Education and Training

VET recurrent revenue is provided primarily by the State and Territory Governments (58% in 2000), with additional funds being provided by the Commonwealth Government (21%). The balance of revenue (21% in 2000) comes from fee-for-service activities, ancillary trading, and student fees or charges.

All States and Territories charge most students some form of administration fee for VET courses. This varies according to the type of course and its duration. Nationally, in 2000 around 4% of recurrent revenue for VET institutions was provided by student fees and charges. Another 11% was received as fee-for-service revenue from full-fee paying overseas clients, employers and other individuals or organisations.

Funding of higher education

Most higher education institutions are funded by the Commonwealth Government under the Higher Education Funding Act 1988. In 1999 the operating revenue (before abnormals) of these institutions amounted to $8,730m, 45% of which came from Commonwealth government grants. Commonwealth government funding is also provided to higher education institutions through various research programs, mostly on the advice of the Australian Research Council (ARC).

In addition to government funding, institutions receive payments from students who are required to contribute to the cost of their education through the Higher Education Contribution Scheme (HECS), and from other fee paying students. Higher education fees and charges have increased in importance in recent years. In 1999, 19% of operating revenue was raised from HECS, while other fees and charges accounted for a further 18% of income. These fees and charges included $79m (representing justover half of the fee income) from fee-paying overseas students. Some institutions rely more heavily than others on fees paid by overseas students. For example, the Royal Melbourne Institute of Technology Universityand the Curtin University of Technology in Western Australia received some 22% and21% respectively of their revenue from fee-paying overseas students. This isabove the overall national average of 7.3%.